Good morning! Firstly this morning I've been having a quick look at results from Printing.com (LON:PDC) . The big question here is whether they are able to maintain the dividend, which was reduced from 3.15p to 2.55p for year ended 2011/12.
They announce this morning that the final dividend has been maintained at 1.5p, giving 2.55p total for the year, which means the shares have an enormous, but clearly unsustainable yield of 11.9%, with the share price at 21.5p.
Sure enough, when you dig deeper into the narrative, they say that future dividend policy will require them to be covered by earnings. This year EPS was 1,69, so the full year dividend was only 66% covered by earnings. Therefore if earnings are unchanged next year, then the dividend is likely to be cut by at least a third.
They also update on a change of strategy, towards a cloud-based business model. The outlook statement sounds too cautious for me to want to investigate further, so I'll pass on this one.
Next let's have a quick look at results from Latchways (LON:LTC). This is a company which I've previously mentioned positively in these morning reports. They are a maker of specialised safety equipment, e.g. large suction pads which are used by workers in the aviation industry, so that workers are tethered to the plane wing, and can move about on the plane wing without any risk of falling off.
I like this company's niche products, it's high operating margins (indicating pricing power, hence a product which is in demand), the strong balance sheet with net cash, and a reasonable dividend yield.
In the past the shares have looked a tad expensive, but their results this morning look good, and the valuation now looks more sensible to me. They have delivered a strong second half, and full year revenues have risen 2.5% to £42.4m.
Adjusted profit before tax is up 3.3% to £10.3m. Adjusted basic EPS is up 6.5% to 70.3p.
At a mid-price of 1034p that translates into a PER of 14.7, which is probably about the right price. Bear in mind that net cash of £10.5m is equivalent to 94p per share. More importantly, you know that a company with a decent net cash buffer won't need to do an unexpected fund-raising if it…